The opinion of the court was delivered by: LAWRENCE KAHN, District Judge
MEMORANDUM-DECISION AND ORDER*fn1
Presently before the Court is an appeal by Debtor James J. Ball
("Debtor"). Debtor, a licensed attorney, appeals from several
rulings of the Bankruptcy Court for the Northern District of New
York in an action brought by Plaintiff A.O. Smith Corporation
("AOS"). Specifically, he asks this Court to reverse the rulings
of the bankruptcy court and now order that (1) Debtor is
discharged from paying an award of attorney's fees that was
granted by the U.S. District Court in Louisiana because the
district court did not conclude that Debtor acted willfully or
maliciously as is required under 11 U.S.C. § 523(a)(6); (2) the
admission of unauthenticated copies of the transcripts from
proceedings in the District Court of Louisiana violated the
Federal Rules of Evidence, and therefore they should have been
excluded from evidence at the bankruptcy trial; (3) AOS should be
held in contempt of court because it violated the automatic stay
by filing (a) in the Eastern District of New York, a motion for
costs stemming from a scheduled deposition of Debtor and (b) in
state court, a motion to have Debtor's pro hoc vice status
revoked in that jurisdiction;*fn2 (4) it was mandatory for
AOS's counsel to withdraw from representation of AOS, pursuant to
Disciplinary Rule 2-110(b)(2), because they violated Disciplinary
Rule 5-102 by appearing as both a witness and legal advocate for
their client; and (5) pursuant to Local Bankruptcy Rule 9022.1,
the orders of the bankruptcy court are vacated because they were
never served on Debtor.
In reviewing the rulings of a bankruptcy court, a district
court applies the clearly erroneous standard to a bankruptcy
court's conclusions of fact, and de novo review to
conclusions of law. Yarinsky v. Saratoga Springs Plastic
Surgery, 310 B.R. 493, 498 (N.D.N.Y. 2004) (Hurd, J.) (citing to
In re Manville Forest Prods. Corp., 209 F.3d 125, 128 (2d Cir.
2000); In re Petition of Bd. of Dirs of Hopewell Int'l Inst.
Ltd., 275 B.R. 699, 703 (Bankr. S.D.N.Y. 2002); Fed.R. Bankr.
P. 8013). Mixed questions of law and fact are reviewed de
novo. Ernst & Young v. Bankr. Servs. (In re CBI Holding Co.),
311 B.R. 350 (S.D.N.Y. 2004) (citing to In re Vebeliunas,
332 F.3d 85, 90 (2d Cir. 2003); In re AroChem Corp., 176 F.3d 610,
620 (2d Cir. 1999)). Under Rule 8013 of the Federal Bankruptcy
Rules, on appeal, "the district court . . . may affirm, modify,
or reverse a bankruptcy judge's judgment, order, or decree or
remand with instructions for further proceedings."
(b) Dischargeability of Attorneys Fees Awarded
The award of attorney's fees that Debtor now seeks to have
discharged was ordered by Judge
Tucker L. Melancon in Gatreau v. AOS, No. 98-CV-1187 (W.D. La.
2001). In that proceeding, Debtor, a licensed attorney,
represented a plaintiff who alleged fraud surrounding his
purchase of a used silo manufactured by AOS. With respect to the
merits of the action, the district court granted AOS's motion for
summary judgment and dismissed plaintiff's action with prejudice
because it was time barred. W.D. La. Tr. (Dkt. No. 1, Appellant
Ex. 6)*fn3 at 4-5. AOS then moved for sanctions against
Debtor pursuant to Rule 11, alleging that the frivolous lawsuit
was initiated only to harass and cause unnecessary litigation
expense. Id. at 6-7. AOS also sought sanctions pursuant to
28 U.S.C. § 1927 which were to be granted, in accordance with Fifth
Circuit precedent, only if the factual and legal arguments are
"unwarranted." Id. at 9-10.
After holding several days of hearings, Judge Melancon issued
his oral decision on January 31, 2001 that Debtor was to be
sanctioned because he filed the suit against AOS even though
"[t]here was not a colorable claim when the lawsuit was filed."
Id. at 10. Judge Melancon explained that "the prescription
issue as to the state law claim . . . and the statute of
limitations issue as to the RICO claim were so obviously abar
[sic] that under the circumstances it was unreasonable to bring
the suit in the first place [for] a reasonably competent
attorney, which [Debtor] should be. . . ." Id. at 11. The Fifth
Circuit affirmed the imposition of sanctions holding that "the
district court gave sufficient reasons for the sanctions award,
including the type and amount of sanctions." Gautreau v.
A.O.Smith Corp., No. 01-30336, slip op. at 2 (5th Cir. March 27,
Once Debtor filed for Chapter 7 bankruptcy, the parties
disputed whether the debt arising from the imposition of
sanctions should be discharged. The bankruptcy court held that it
is non-dischargeable pursuant to § 523(a)(6) which states that "a
discharge under [Chapter 7] . . . does not discharge an
individual debtor from any debt . . . for willful and malicious
injury by the debtor to another entity. . . ."
11 U.S.C. § 523(a)(6); In re Ball, No. 02-60810 (Bankr. N.D.N.Y. Feb. 10,
2004).*fn5 Debtor contends that the bankruptcy court erred
when it invoked this exception and held that the sanctions would
not be discharged. Debtor explains that the sanctions were
imposed because Judge Melancon concluded only that Debtor's
conduct was "unreasonable." Debtor claims that because Judge
Melancon did not hold that Debtor's conduct was "willful and
malicious," the debt is dischargeable and the exception to
discharge for debt's incurred willfully or maliciously, as set
forth in § 523(a)(6), is not applicable.
Whether the factual findings satisfy the statutory requirements
of non-dischargeability pursuant to § 523(a)(6) is properly
characterized as a mixed question of law and fact which the court
reviews de novo. See Golant v. Care Comm, Inc.,
216 B.R. 248, 252 (N.D. Ill. 1997).
(iii) Willful Nature of Debtor's Actions
Based on the record before the Court, the bankruptcy court
properly ruled that the award of attorney's fees was not to be
discharged pursuant to the exception in § 523(a)(6). Collateral
estoppel prevents Debtor from relitigating Judge Melancon's
decision to impose sanctions. See Grogan v. Garner,
498 U.S. 279, 284 n. 11 (1991) (stating that "collateral estoppel
indeed apply in discharge exception proceedings pursuant to
section 523(a)"). Under principles of collateral estoppel,
therefore, this Court is bound by the district court's "factual
finding . . . that the filing of the lawsuit initially was
unwarranted and should never have been commenced, had a
reasonable investigation been made by Mr. Ball. . . ." W.D. La.
Tr. (Dkt. No. 1, Appellant Ex. 6) at 16.
Judge Melancon explained that Debtor's actions were "a clear
violation under Rule 11." Id. at 13. Moreover, Debtor's actions
in the course of representing plaintiff were so egregious that
even though the Fifth Circuit "sparingly applie[s]" the
imposition of sanctions under 28 U.S.C. § 1927, Judge Melancon
thought such an award was appropriate because "the proceedings
were unwarranted and should never have been commenced. . . ."
Id. at 13. Although it did not rely on it, the district court
also explained that it "has the authority under its inherent
power to sanction [Debtor]." Id. at 14. Therefore, pursuant to
Rule 11 and § 1927, the district court "shift[ed] . . . the
entire financial burden of the action . . . from the defendant
[AOS] to the plaintiff [Debtor]." Id. at 13.
The question before this Court is whether Debtor's actions in
Louisiana district court were willful and malicious, such that
the attorney's fees debt should not be discharged under the
exception of § 523(a)(6). All attorneys must act reasonably when
operating within the confines of our judicial system, and the
statements of Judge Melancon certainly demonstrate that the
Debtor did not. While Judge Melancon did not state on the record
that Debtor's actions were "willful and malicious," that is
inherent based on the imposition of sanctions under Rule 11 and §
1927. Under Fifth Circuit precedent, sanctions under § 1927 that
are imposed for an "`unreasonable' and `vexatious' multiplicative
proceeding[,] necessitates `evidence of bad faith, improper
motive, or reckless disregard of the duty owed to the court.'"
Mercury Air Group, Inc. v. Mansour,
237 F.2d 542, 549 (5th Cir. 2001) (quoting Edwards v. General Motors
Corp., 153 F.3d 242, 246 (5th Cir. 1998)); see also, State
St. Bank & Trust Co. v. Inversiones Errazuriz Limitada,
374 F.3d 158, 180 (2d Cir. 2004) ("Section 1927 authorizes the imposition
of sanctions only when there is a finding of conduct constituting
or akin to bad faith.") (internal quotations and citations
omitted); Morelli v. Service Am. Dining Servs., 1998 U.S. Dist.
LEXIS 5058, at *5 (N.D.N.Y. Apr. 3, 1998) (Scullin, J.) ("`The
term `willful,' as expressed in 523(a)(6), is synonymous with
intentional. . . . The statute requires not only intentional
conduct on the part of the debtor, but also intentional or
deliberate injury.'") (internal quotations and citations
omitted). Debtor even admitted that his conduct was found by
Judge Melancon to be "intentional conduct that was in bad faith."
July 17, 2003 Bank. Tr. (Dkt. No. 1, Appellant Ex. 5)*fn6 at
34. Therefore, based upon the statements of Judge Melancon and
the assessment of fees under § 1927, Debtor's conduct is properly
characterized as "willful and malicious." Although the district
court did not use the terminology found in § 523(a)(6), namely
that his conduct be "willful and malicious," it is clear from the
record that his actions rise to that level. The bankruptcy court
correctly held that this debt fits within the exception of §
523(a)(6) and should therefore not be discharged.
(c) Admission of an Unauthenticated Transcript
In support of its claim that the award of attorney's fees was
not dischargeable pursuant to § 523(a)(6), the only evidence
offered by AOS in the bankruptcy court's adversary proceeding
duplicates of the transcripts from the Western District of
Louisiana proceedings.*fn7 Debtor next contends that, even
if, as discussed above, the debt should not be discharged based
upon the application of § 523(a)(6) to the facts of the debt at
issue, the bankruptcy court's holding should be overturned
because relying on the transcripts violated the Federal Rules of
Evidence. Therefore, as that transcript should have been excluded
and it offered no other evidence in support of its claim, AOS did
not meet its burden to show that the debt was not dischargeable
pursuant to § 523(a)(6). See Morelli, 1998 U.S. Dist. LEXIS
5058, at *5 (noting that the party challenging the
dischargeability of a debt carries the burden of proving the
In sum, Debtor's objection is that the transcripts that were
admitted were not originals. Rather, the bankruptcy court
admitted duplicates of the transcripts from the Louisiana
proceedings because AOS did not bring the originals to the
bankruptcy trial. See July 17, 2003 Bankr. Tr. (Dkt. No. 1,
Appellant Ex. 5) at 8-19. The duplicates included the attached
court reporters' signed certification. Id. at 16-17. At trial,
Debtor contended that, as the transcripts were not originals,
they must be authenticated by a witness or otherwise excluded.
Nonetheless, the bankruptcy court admitted the transcripts
because, as certified copies of public records, they are
self-authenticating under Federal Rule of Evidence 901(4), and a
duplicate of such a record is admissible to the same extent as an
original under Federal Rule of Evidence 1003.
This Court reviews the bankruptcy court's evidentiary ruling
for an abuse of discretion. See, e.g., Manley v. AmBase,
Corp., 337 F.3d 237, 247 (2d Cir. 2003) (citations omitted).
Even if a bankruptcy court did abuse its discretion in admitting
evidence, the decision is reversible only if it
also affects a party's substantial rights. Daly v. Richardson,
2004 U.S. Dist. LEXIS 19635, at *7 (D. Conn. Sept. 28, 2004)
(citing to Schering Corp. v. Pfizer, Inc., 189 F.3d 218, 224
(2d Cir. 1999)).
In the present case, the bankruptcy judge did not abuse his
discretion. He properly ruled that a court transcript is
self-authenticating under Rule 902(4), which states that
"[e]xtrinsic evidence of authenticity as a condition precedent to
admissibility is not required with respect to . . . [a] copy of
an official record or report . . ., or of a document authorized
by law to be recorded or filed and actually recorded or filed in
a public office, . . . certified as correct by the custodian or
other person authorized to make the certification. . . ." The
trial transcripts, which contain the court reporters'
certifications, are therefore admissible as prima facie evidence
of what was said therein. See United States v. Lumuba,
794 F.2d 806, 815 (2d Cir. 1986). Therefore, the Western District of
Louisiana transcripts, in original form, are admissible even
without an authenticating witness.
Moreover, because these original transcripts are admissible,
duplicates would be admissible under Rule 1003. See United
States v. Grimmer, 1999 WL 1012571, at *2 (2d Cir. Oct. 14,
1999) (unpublished). Rule 1003 does list two exceptions, that the
duplicate is not admissible if "(1) a genuine question is raised
as to the authenticity of the original or (2) in ...